about the rules governing mandated network sharing, then there can be little objection as long as they have the choice of whether or not to invest. But regulators should take care not to stymie investment in the first place by instituting overly rigorous requirements for mandated sharing.2.5.5 Grants and subsidies There have been some successful examples of government use of modest grants and subsidies to overcome stiff resistance to network sharing, particularly from incumbent fixed-service operators. Box 2.3 showed how Singapore used a financial incentive to promote a co-investment arrangement. In New Zealand, the government used a grant to provide an incentive to deploy an ultra-fast, FTTH network, inducing the fixed incumbent to structurally separate in order to participate in the initiative. 2.6 Potential downsides to network sharing While there are potential downsides for governments of network sharing and co-investment, they are generally regarded as fairly manageable, in the right circumstances. This section explores those downsides and how to cope with them.2.6.1 Reduction in competitive intensity Reduction in competitive intensity can be a concern with network sharing, as competition will be confined to the services layer, rather than to both services and infrastructure layers. The common stance regulators have taken is that, at least for passive network sharing in the mobile sector, there is little competitive benefit in expanding pure coverage, so infrastructure sharing is unlikely to harm competition. Similarly, with most types of active network sharing in the mobile sector, the impact on competition is fairly benign as long as sharing operators have the ability to differentiate their services from one another. However, once a sharing arrangement has achieved integration at the infrastructure layer, it’s very difficult to unwind, leading to a potentially permanent reduction in infrastructure competition.2.6.2 Potential for collusive dealing and information sharing There is also the potential for collusive dealing between sharing operators. Regulators need to carefully evaluate this issue and engage in ongoing monitoring. Sharing of commercially sensitive information among co-investors is a concern, as well, but it may be an inevitable feature of sharing arrangements. Appropriately structured procedures and protocols can be implemented to reduce the competitive impact of such information sharing.2.6.3 Reduced options for services-based competitors A reduction in infrastructure competition may lead to reduced options and more limited capacity being available for service-based competitors such as MVNOs. This may not be such an issue where sharing operators retain their competitive independence – the motivations for entering into MVNO-type arrangements should not change in these cases. Limited capacity can be an issue, but most sharing or co-investment arrangements can be expected to provide sufficient capacity Trends in Telecommunication Reform 2016 63 Chapter 2 Box 2.5: Tower Limits in Indonesia In Indonesia, the sector Ministry has restricted the construction of new towers in the vicinity of existing towers in order to persuade operators to undertake infrastructure sharing. Under the terms of the regulation, a new tower can be constructed only if, for some reason, the existing tower cannot be shared16. The regulation provides a guideline for the construction and development of joint mobile towers. Owners of mobile towers are required to give non-discriminatory access to other telecommunication operators. The tower owners also must give information about their tower’s capacity to potential access-seekers in a transparent manner.